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Opening multiple money market accounts is a smart move

MMAsLife may be easier when you keep things simple, but it may not necessarily be as profitable. When it comes to your savings strategy, adding a little complexity could pay dividends. One such example might be opening multiple money market accounts.

Why would you want to open more than one money market account?

One reason is that money market accounts can be a good place to house your emergency funds. But also, if you'd read the most recent America's Best Rates survey, you might be interested in money market accounts because these are posting some very significant rate gains. In fact, all of the top ten money market accounts in the survey had an above-average rate increase during the quarter.

America's best money market rates for the second quarter of 2018 were:

Rank

Bank

Money Market Account Rate

1

CIT Bank (ABR platinum medal winner)

1.79 percent

2

Able Banking (ABR gold medal winner)

1.70 percent

3

Sallie Mae Bank (ABR silver medal winner)

1.68 percent

4

UFB Direct (ABR bronze medal winner)

1.60 percent

5

Capital One

1.57 percent

6

Nationwide Bank

1.55 percent

7

BBVA Compass

1.53 percent

8

Discover Bank

1.40 percent

9

First Internet Bank

1.27 percent

10

TIAA Direct

1.09 percent

The problem is that we don't know what the rates will be tomorrow, next week or next month.

But consider this example: Let's say you have $50,000 to place in money market accounts. You know that each of these banks have been consistently raising rates. You would do well to pick the highest rate and deposit the full $50,000 into a new online MMA and forget it.

However, if you were to open multiple money market accounts at different banks, you might have some interesting advantages.

  1. Access to higher yields
    Nothing says you have to distribute your funds proportionally. If you see that one bank has increased its rates dramatically, you can move funds to capture a better yield while keeping account minimums at the other banks. In the long run, this could be a profitable strategy.

  2. Access to funds
    People think of money market accounts as a savings account with check-writing ability. That's one way to look at it, but there are restrictions. Like a traditional savings account, you can only make six withdrawals per month from a money market account. Exceed the limit of six withdrawals a month and you may start incurring fees. But if you have four money market accounts, you can access funds 24 times per month without incurring fees.

  3. FDIC insurance
    If you have other assets at your bank -- a couple CDs, for instance -- you could easily run over the $250,000 deposit insurance limit by opening your new money market account at the same bank. Placing your deposits at multiple banks can alleviate this concern.

Choosing a bank that consistently raises its rates can be a good way to make life easy and profitable. If you're up for more complexity with the potential for greater profit, search harder for the best money market rates and consider opening multiple MMAs at different banks. Some of the highest money market rates listed on MoneyRates.com exceed 2 percent these days, many come with low minimum-balance requirements -- and the other advantages might come in handy too.

More money market account resources

For tips on how to succeed in this rate environment, read 2018 Outlook - 6 factors affecting money market rates

Thinking retirement? Learn about IRA money market accounts to save for retirement

More banking resources

Check out the latest MoneyRates.com update on bank fees if you're sensitive to paying monthly maintenance and ATM fees.

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